When J.C. Penney announced last week that it had hired Ron Johnson — formerly in charge of Apple’s retail stores — to take over as CEO of the beleaguered department store, investors rewarded the move with a 17.5% increase in the company’s stock price.
But it turns out that Johnson won’t be flying solo in the job, at least for a while. He will be sharing duties with outgoing CEO Myron Ullman III, with Ullman focusing on strategy, finance, accounting and logistics while Johnson handles marketing and the “selection and sourcing of product,” according to an article in The Wall Street Journal on June 18.
Although the Journal piece did not set a deadline for the job sharing to end, the retail publication Women’s Wear Daily on Monday reported that the transition period would be three months, and that Ullman will leave Penney’s and its board on February 1, 2010. Johnson is slated to start his CEO job on November 1, 2011. There is no decision on who will take over Ullman’s role as board chairman.
However long the job-sharing lasts, Wharton marketing professor Stephen Hoch says it’s bad business. “The announcement of shared responsibilities put a damper on what was seen as a bold coup of a hire. It is weird for the chairman to be responsible for both operations and finance. My guess is that there is disagreement within the board: The new activist board members wanted Johnson, but Ullman did not want to give up all the power…. Maybe it is just an attempt to let Johnson get up to speed, but that does not make sense when he has been positioned as the savior of a broken department store like JCP.”
Marketing professor Barbara Kahn, director of Wharton’s Jay Baker Retailing Initiative, describes the Johnson hire “as an incredible coup for J.C. Penney. Nobody can deny Johnson’s past successes” at Apple and before that, at Target.
He is going to need that experience. According to Hoch, “J.C. Penney is a turnaround story that is really tough stuff. Not only is JCP sitting on too much mall real estate, but the mall-based department format is a dinosaur that will continue to slowly fade away, as has been the case for the last 25 years. JCP also is stuck between Macy’s, which is more upscale, and Kohl’s, which is cheaper and can still open up more stores in cheaper real estate.”
Some observers of these developments contend that the job-share move makes sense because Johnson has never been a CEO and therefore could use the steady hand of his predecessor to help adjust to the top job. In addition, the Journal article points out that this is not the first time such an arrangement has been implemented. Thomas G. Stemberg, founder of Staples, continued to oversee a number of CEO responsibilities when he stepped down as CEO in 2002. Contrary to Ullman’s pledge to leave the board three months after Johnson arrives at the company, Stemberg exercised no such brevity. He stayed on as chairman of Staples for three years, according to the Journal.